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US says $400m cash delivery to Iran was ‘leverage’ for release of prisoners

In first, State Department admits connection between payment, prisoner swap and implementation of controversial nuke deal

US State Department spokesman John Kirby briefs reporters on August 18, 2016. (screen capture/US State Department)
US State Department spokesman John Kirby briefs reporters on August 18, 2016. (screen capture/US State Department)

The US State Department on Thursday said that a $400 million cash payment to Iran was used as “leverage” to secure the release in January of four American prisoners held by Tehran, as negotiations for the implementation of last year’s nuclear deal were being settled.

“The payment of the $400 million was not done until after the prisoners were released,” State Department spokesman John Kirby told reporters Thursday.

“We took advantage of that to make sure we had the maximum leverage possible to get our people out and get them out safely,” Kirby added.

This is the first time the US has admitted to a connection between the release of the prisoners, including the Washington Post’s Jason Rezaian, and the funds.

Earlier this month, US Secretary of State John Kerry flatly denied any connection between the cash — and an additional $1.3 billion interest payment — and the implementation of the nuclear deal and the prisoner swap that all occurred in rapid succession. The payment was part of a decades-old dispute over a failed military equipment deal dating to the 1970s, before the Islamic revolution in 1979.

US Secretary of State John Kerry, left, meets with Iranian Foreign Minister Mohammad Javad Zarif at United Nations headquarters Saturday, Sept. 26, 2015. (AP/Craig Ruttle)
US Secretary of State John Kerry, left, meets with Iranian Foreign Minister Mohammad Javad Zarif at United Nations headquarters Saturday, Sept. 26, 2015. (AP/Craig Ruttle)

“The United States does not pay ransom and does not negotiate ransoms,” Kerry told reporters in Buenos Aires two weeks ago. “It is not our policy. This story is not a new story. This was announced by the president of the United States himself at the same time.”

Kerry said the payment was part of a deal under the then US-backed shah to buy $400 million worth of military equipment in 1970s. The equipment was never delivered because in 1979, his government was overthrown and revolutionaries took American hostages at the US embassy in Tehran. The US and Iran have been negotiating the Iranian claim to the money since 1981, and Kerry said that negotiation was separate from the nuclear deal and discussions about Americans held in Iran.

He said the settlement agreement ultimately saved US taxpayers what could have been billions of dollars in additional interest.

“We believe this agreement… actually saved the American taxpayers potentially billions of dollars,” Kerry said. “There was no benefit to the United States of America to drag this out.”

According to Reuters, the chairman of the House of Representatives Committee on Oversight and Government Reform, Representative Jason Chaffetz, has asked Kerry to appear before a future committee hearing to discuss the cash payment.

The story was first revealed by the Wall Street Journal on August 2 which reported that the US government airlifted the funds to Iran in an unmarked cargo plane the same day four Iranian-American prisoners were released on January 17.

In exchange for the four Americans, the US released seven Iranian nationals and dropped extradition requests for 14.

Since their release, Iran has detained three more Iranian-American dual nationals, including an elderly man, on unknown charges. A number of other dual nationals are also said to be held by Tehran.

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